Alternative Business Financing

It is the American dream to own a business.  Many brand new entrepreneurs find themselves thinking up wonderful ideas and big plans for the future as a business owner.  While a lot of people think big, it can be very difficult to follow through with these plans if they cannot get a business loan.  Business loans are very hard to obtain, particularly for people who are just starting out and have little to no track record.  There are quite a few requirements that banks usually have in order to grant large business loans.  First, they want the business owner to already have been established for about 2 years prior to requesting the loan.  Other requirements include having a high credit score, asking for less than $100,000, and the business owner must have collateral.  Fortunately, there are several forms of alternative business financing out there for those who need an extra boost to get their businesses off the ground and running.  The first is called a business cash advance.  Essentially the lender takes all of the business’ proceeds from credit card sales and purchases them from the business owner, then sells them to other businesses at a discounted rate.  This is beneficial to the business because they receive this money as an advance, allowing them to receive money quickly and not worry about interest rates or large repayment amounts.

While the business cash advance may seem like a loan, it is actually an investment.  This means that there are no repayment plans or high interest rates.  The lender simply uses your credit card receivables as an investment for them, seeking a return which makes the plan profitable for them as well.  Unlike a loan, there are no application fees, hidden costs, or tons of paperwork involved.  Generally all that is needed is that the business be in operation for at least on year prior, currently taking Visa and MasterCard as payments from customers, and the business must be either retail or a restaurant.  Internet businesses are not usually accepted.  Once the business applies for assistance, all that’s really needed is proof of customer transactions, which can be provided easily through the business’ merchant services provider account.  Businesses can borrow anywhere from a few thousand dollars, all the way up to $500,000, depending on how much they need as well as how much income they can show from credit card sales.  This plan benefits both the business owner and the lender, since the lender is actually an investor versus a bank who loans businesses money.  The investor gets a nice return on the credit card payments, while the business achieves the financial freedom they need to pay for things that will enhance their business and bring in more money.  It is a good plan for small, newer businesses that need financial help but have been turned down by the banks.  Every small business deserves a chance, and this form of alternative business financing may just be the thing to get them headed out on the right foot.